Constructing your individual buying and selling technique from scratch is troublesome. It is quite a bit simpler to discover a buying and selling technique that another person is buying and selling efficiently and tailor it to suit your character.
With that in thoughts, I at all times preserve my eye out for brand new buying and selling methods and take a look at them out to see in the event that they work or not.
I discovered this technique in a Kindle ebook and it regarded prefer it may work, so I gave it a take a look at. On this publish, I am going to present you the way the technique works, the testing plan that I created and the outcomes of my testing.
On the finish of this publish, I am going to present you potential upgrades to this technique and the place you may see my further testing outcomes with this methodology.
The Buying and selling Methodology Defined
This buying and selling technique comes from the ebook MT4/MT5 & TradingView Excessive Likelihood Foreign exchange Buying and selling Methodology by Jim Brown. I do not know Jim and I wasn’t paid to assessment this ebook.
This ebook was bought with my very own cash.
I truly had this ebook in my Kindle library for a few 12 months earlier than I received round to studying it. One thing about it drew me in, however the spammy title additionally put me off just a little.
Once I lastly opened the ebook, the buying and selling methodology made sense and I learn the entire ebook in 1 sitting.
It is a straightforward learn with first rate photos as an instance the ideas.
Jim is the inventor of this buying and selling technique and he makes use of it to commerce for a residing. Since that is Jim’s methodology, I will not go into the entire particulars.
You will have to purchase the ebook to get all of his buying and selling strategies, insider suggestions and obtain the customized indicators that include the ebook. Nonetheless, I am going to present you adequate so you may see what I did.
In case you like my outcomes, you get the ebook. If not, you may search for one thing else.
On the upside, the fundamentals of the buying and selling technique are easy.
It is made up of three transferring averages and a pair of momentum indicators. The tactic seems to be for modifications in momentum and marks the chart at factors the place you may doubtlessly get in at turning factors.
As you are taking a look at a pattern chart, you may in all probability inform that you need to use the indicators in a few alternative ways. You’ll be able to both take trending trades or countertrend trades.
I made a decision to take pattern trades solely in my take a look at.
The Testing Plan
The wonderful thing about this ebook is it reveals you some wonderful entry strategies. On the draw back, it is mild on exit methods.
In actual fact, there aren’t any exit methods.
Jim offers some solutions on how one can doubtlessly exit a commerce, however nothing concrete.
That is one of many largest downsides of many in any other case helpful buying and selling books. They do not offer you an entire buying and selling technique.
There may very well be many the explanation why the writer selected not to do that. Perhaps his exits are based mostly on studying the market, as an alternative of getting set guidelines.
Nothing incorrect with that.
However from the standpoint of somebody studying the ebook and desirous to learn to commerce, it leaves the reader hanging.
That is why I am sharing my outcomes right here.
Nonetheless, the ebook does offer you an ideal start line to create your individual technique.
The opposite draw back is that this ebook would not offer you stats on the buying and selling methodology.
Once more, I get why authors try this. They do not need to create expectations or get offended emails from readers who do not get the precise identical outcomes as a result of a large number of causes that will take just a few hours to diagnose.
Due to this fact, it was as much as me to provide you with my very own exit technique.
However the place to start out?
I’ve discovered that the best technique to begin testing a buying and selling system that does not have set exits is to make use of a 1X danger revenue goal. So if the cease loss is 100 pips, then the take revenue will even be 100 pips.
This may not work in all circumstances, however it’s a fast and soiled manner to assist me see if a technique has potential or not.
So here is the buying and selling plan that I put collectively to do my first backtest of the ideas on this ebook.
- Pair: EURUSD
- Timeframe: Day by day
- Threat per commerce: 1%
- Entry: Pattern trades solely. Look ahead to transferring averages to stack up so as. Quick to lengthy (high down) in an uptrend, lengthy to quick in a downtrend. That is similar to different pattern buying and selling strategies that use a number of transferring averages. As soon as the transferring averages are stacked within the appropriate order, I await a dot on the chart, whereas value bounces off one of many transferring averages. Purple dots are sells and inexperienced dots are buys. Open the commerce as quickly because the candle closes.
- Cease loss: Set the cease loss on the opposite facet of the final swing.
- Take revenue: 1X danger
- Commerce administration: None, set and neglect.
Lengthy Instance
On this lengthy instance, I entered a commerce on the inexperienced dot marked by the arrow. It was a commerce that hit the revenue goal simply.
As you may see, this commerce made way more after it hit the take revenue. I am going to get into extra about how I used to be in a position to benefit from these “additional” strikes and improve the output of this primary technique, later on this publish.
Quick Instance
It is a comparable concept right here. Enter on the shut of a red-dot candle, when the transferring averages are lined up appropriately and value bounces off the quick, medium or lengthy transferring averages.
Testing Methodology
I might usually use Foreign exchange Tester for a method like this, however the customized indicators are solely obtainable for MT4, MT5 and TradingView.
Nice.
So I fired up TradingView and a spreadsheet to start out backtesting. This methodology takes just a little longer than utilizing Foreign exchange Tester, however it will get the job completed.
The information in TradingView goes again to 2003, so it is sufficient to do a stable take a look at.
Testing Outcomes
- Pair: EURUSD (each day)
- Trades: 84
- Win fee: 75.0%
- Complete return: 42%
- Max dropping trades in a row: 2
- Max drawdown: -3%
- Testing interval: Might 7, 2003 to January 19, 2022 (~224.5 months)
- Common return: 0.18% per thirty days
Video Model
If you wish to see the ideas in motion, watch this video.
Last Ideas
I think about this an excellent take a look at.
The technique works.
A max drawdown of three% is excellent.
However that is simply the place to begin. There is likely to be methods to extend the return of this technique.
If you wish to be taught the entire suggestions and methods that Jim teaches, get the ebook right here.
To get all of my future updates the place I take a look at new and doubtlessly extra worthwhile variations of this technique, be part of my personal membership group right here.
